The Lands Tribunal has handed down a number of important decisions in the last week that those working in the field of leasehold enfranchisement need to be aware of.
Earl Cadogan v Erkman LRA/56/2007 & LRA/68/2007 (links to a .pdf file) concerns attempts to get around the decision of the Court of Appeal in the Sportelli litigation ([2008] 2 All ER 220). Although Sportelli subsequently went to the House of Lords, it only went up on the question of “hope value” (see our earlier post about this here). The Court of Appeal decision is – arguably – of wider practical importance, since it confirmed that there was a general deferment rate of 4.75% for houses and 5% for flats and that the Lands Tribunal could and should give detailed guidance of this sort for the benefit of the LVT.
In the appeal, both parties contended both that the LVT had erred in applying the Sportelli deferment rate and that a different rate should have been applied. Evidence justifying departures from the Sportelli approved figures was filed on both sides.
The Lands Tribunal held that it had the power to allow this new evidence to be adduced by both parties but that, in the present case, it would not allow the evidence to be relied upon. At least some of the evidence was directed to undermine the decision in Sportelli and should not be allowed. The LVT (and Lands Tribunal) should only allow evidence which went to undermine the Sportelli approved deferment rates in exceptional circumstances.
For those working in enfranchisement in and around London, this will be a very welcome decision, since it means that we no longer need detailed expert evidence on deferment rates, save, perhaps, for a truly exceptional case. However, for those working outside of London, this decision will not be well received. There was already some considerable disquiet about having a deferment rate which was determined in litigation about PCL (Prime Central London) properties applied to – say – rural Gloucestershire. But, the Lands Tribunal has spoken…
Halliard Property Company Ltd v Bemont Hall and Elm Court RTM Company Ltd and other appeal LRX/130/2007 & LRA/85/2008 (links to a .pdf file) concerns the power of the LVT to award up to £500 of costs against any party who has acted “frivolously, vexatiously, abusively, disruptively or otherwise unreasonably in connection with the proceedings.” (See Sch 12, para 8, Commonhold and Leasehold Reform Act 2002).
The appellant companies were freeholders of various properties. In one case, the appellant had been the respondent to a Right to Manage application which had been withdrawn and in the other appeal, it had been the respondent to an application for a lease extension. In each case, the appellant company was entitled to a sum (to be determined by the LVT) in respect of its costs.
In each case, the LVT pushed for the matter to be determined on the papers and, in each case, the appellant companies rejected this approach and sought an oral hearing on the question of costs. The LVT determined that – by requiring an oral hearing in a matter which the LVT thought was suitable for a determination on the papers – the appellant companies had acted otherwise unreasonably and ordered that the appellant company pay costs, not to exceed £500 in each case.
Unsurprisingly, the companies appealed these costs orders and their appeals were allowed by the Lands Tribunal. In order for a party to behave “otherwise unreasonably” it’s behaviour had to be akin to the previous words in the sentence – i.e. it had to be frivolous, vexatious, abusive or disruptive. Merely behaving in a manner which merited criticism was not, of itself, unreasonable behaviour. Regard should he had to the comments of Sir Thomas Bingham MR (as he was then) in Ridehalgh v Horsefield [1994] 3 All ER, to the effect that something cannot be unreasonable if it has a reasonable explanation and behaviour in reliance on the judgment of a legal practitioner is not usually regarded as being unreasonable.
In addition, a party had an absolute right to an oral hearing before the LVT and it was the paper based hearing which was the exception to the general rule. It would need truly exceptional circumstances before a party could be said to have acted unreasonably by insisting on the exercise of a statutory right.
Robust common sense all round.
The comment above that “However, for those working outside of London, this decision will not be well received.
There was already some considerable disquiet about having a deferment rate which was determined in litigation about PCL (Prime Central London) properties applied to – say – rural Gloucestershire.” … serves to perpetuate the nonsense conveniently held by many surveyors that financial market rates somehow have a different application in different parts of the same economy.
Anyone with even the slightest finance background or a passing knowledge of basic economics knows that this sort of argument has no basis in fact.
Proponents of this nonsense may be motivated to mischievously seek a tenuous justification for perpetuating fruitless but fee-generating arguments between surveyors and lawyers (outside London)in negotiation and at LVTs.